Zimbabwe annual inflation rate surges to 236%

Published: 19 January 2019

Renowned United States economist and currency expert Steve Hanke says Zimbabwe's annual inflation rate is at 236 percent, much higher than the official figure of 42,09 percent published by Zimbabwe National Statistics Agency (ZimStats).

The statistics agency reported that year-on-year inflation rate for the month of November 2018 had gained 10,16 percent, surging to 31,01 percent.

Hanke, however, said Zimbabwe's cumulative inflation hit 236 percent as of January 16.

"I have been predicting, abandonment of dollarisation has resulted in another inflation surge in Zimbabwe, measured today (Wednesday) at 236 percent.

"If Zimbabwe fails to remove bond notes from the system, the economy will lapse within a year or less," Hanke posted on his Twitter account.

Hanke's calculations are derived from the Old Mutual Implied rate, which indicates that the inflation rate in Zimbabwe rose sharply.

The national statistics agency reported that inflation rate for the month of November 2018 had gained 10,16 percent surging to 31,01 percent in November.

Hanke, however said by October, Zimbabwe's inflation had hit 155,5 percent, making it the third country with the highest inflation in the world.

Although government maintains that the official inflation is much lower, economists who spoke to the Daily News said Hanke's projections are worth considering.

"It is more reflective of what we have seen in the months of October and November where prices were pegged at a 300 percent increase, so calculating at an annual average, you would get around that figure," Economist Simbarashe Gwenzi said.

Alluding to the recent shutdown called by workers' unions from Monday to Wednesday, economist Christopher Mugaga said absence of activity is also an inflation trigger.

"Right now, you can see many queues in the shops and we have created artificial demand due to high demand and this may cause shops to fail restocking.

"The recent fuel price hikes again will mean businesses will need to re-adjust," he said.

While speculative and profiteering tendencies were said to have exerted stress on the country's inflation, other economists attributed the quickening inflation to the continuance of the parallel currency black market.

With the bond note failing to hold ground, the market has been demanding US dollars progressively moving towards dollarisation.

In 2017, Hanke also warned government of the current hyperinflation, which Zimbabwe is currently experiencing.

Using Purchasing Power Parity (PPP) application, Hanke also measured Zimbabwe's inflation rate during the 2008 "Armageddon", revealing that by November, annual inflation rate had reached 89,7 sextillion percent, adding it to the Hanke-Krus World Hyperinflation Table, Routledge Handbook of Major Events in Economic History. - dailynews